Tuesday, May 11, 2021

Reddit squad finds new silver target, sparks unlikely rally

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This is the web version of the Bull Sheet, Fortune’s daily no BS in the markets newsletter. Sign up to receive it in your inbox here.

Hello. Let’s spin the roulette wheel, and see what the Reddit Squad is aiming for today… Yes, it’s money. You may have seen the #Silversqueeze trend on Twitter This weekend. Well, this morning the cash prices are trading at a high for 5 months, and it increases mining stocks, and it even influences the gold market.

If you weren’t impressed with the rally led by retail last week in GameStop, I understand that. But trading in precious metals is a much bigger target. You don’t often see such massive movements overnight.

On a positive note, there is a lot of green on screens as a risky mood sweeps over the markets this morning.

Let’s see where investors are putting their money.

Market update

Asia

  • The mainAsia Indexare back in the afternoon trading, with Hang Seng high 2.2%.
  • TIC Tac rival Kuaishou technology East seeks to raise $ 5.4 billion in a Hong Kong-based IPO later this week, which would be the world’s largest listing for more than a year.
  • Aung San Suu Kyi and other great leaders Myanmar were detained during an early morning raid Monday, that puts the military back in control of the troubled country.

Europe

  • theEuropean scholarshipswere higher outside the doors with theStoxx Europe 600 high 0.8% outdoors.
  • following a video call the weekend with the managers of the vaccine manufacturers AstraZeneca and Modern, President of the Commission Ursula von der Leyen taken to twitter announce she had won concessions for 9 million additional AZ doses. It will not get the EU back on track, but it is better than nothing.
  • Meanwhile, the UK East on the beat to keep its promise to vaccinate the residents of its nursing homes. Fair don’t ask when they get that second dose.

WE

  • American Futuresrebound this morning. It is after the three main indices have undergone their the worst weekly losses since October, pushing the Dow and S&P 500 in the red for 2021.
  • Robin Hood at trade restrictions in place on eight actions (vs. 50 names) this morning, including the familiar names GameStop, AMC Entertainment, BlackBerry and Nokia.
  • Limiting trade in GameStop could explain why the volume of GME Futures is light in the pre-market this morning. Again, volatility is very high just about everywhere else. the BARELY almost climbed 50% since last Tuesday, and it’s again this morning.
  • Investors looking for a distraction from the GameStop frenzy can just get it through profits. Amazon and Alphabet’s Google report tomorrow, just like Pfizer and UPS.

Somewhere else

  • Goldis on the rise, trading above $ 1,860 / ounce.
  • thedollar is flat.
  • Grossis in place, with Brent to negotiate $ 55 / barrel.
  • From 10 a.m. Rome time Bitcoinwas flat at $ 33,780. The big news was here Dogecoin, who turned out to be the dog of the crypto trade, to crash more … than 40% at some point over the weekend.

***

Winners and losers

Let’s take a look back at the big hits and misses of January, as we do every month.

January was a tale of two halves. The first part of the month was marked by an impressive recovery in risky assets. Technology, energy and small caps all won, helped by decent if not very good earnings. Bitcoin also hit an all-time high on January 8, before settling down. (It’s technically in remedial territory since then.)

Last week we witnessed a major global harm reduction event which according to Morgan stanley (as first reported by The ear of the market), almost matched what we saw last March when the markets fell. Let it sink in. A pandemic is forcing hedge funds to liquidate their positions at an epic rate. Ten months later, a frenzy of day traders unleashes an equally massive short squeeze that forces the hurdles to empty their longs and cover their shorts.

This trade sent the VIX skyward and sank many of the winning bets from the start of the month. Let’s go to the graph.

Up 1625%, GameStop is by far the big winner for January. To put this in perspective, Tesla monster rally 2020 exceeded by + 743%. Fairly good, but not GME good.

After GameStop, the big winners were Bitcoin (+ 14.8% in January), small caps (+ 5%), energy (+ 3.6%) and technology (1.4%). The losers were the benchmarks and the Dow Jones. The Euro Stoxx 600 lost 0.8% and the S&P fell 1.1%. If you have a Dow Targeted ETF in your portfolio, you know full well it’s off to a bad start.

Heading into 2021, there was a lot of excitement in the results season. And the first batch of results surprised on the upside, creating a wave of investor enthusiasm that was then wiped out in last week’s binge eating.

The winning season is far from over. Many big names, including Dow Components, will report in the coming days. Let’s see if large caps can steal some of the limelight from people like Tootsie Roll.

***

Postscript

Alessandro, my thirty-something barber here in Rome, is a lovely guy, that is, as long as you can keep the conversation going at lighter prices: weather, travel, popular culture.

Whenever I come for a snip, I do my best to focus the discussion on the the good life tips: what are the trends Netflix, or the ups and downs of AS Roma. The gossip strategy never lasts.

Before long he talks about the failures of the Italian government and our ineffective mayor. I generally nod my head in agreement with his observations. He then launches the attack on the EU, saying it should be blown up. I’m trying to point out the folly of a heavily indebted Italy going it alone, and it opposes the Greek financial crisis with a non-sequitur. At this point, I know we’re both about to get loud. Very strong.

He believes that globalization is a disaster, and that Goldman Sachs and Wall Street agree to put us all in the streets. “Goldman Sachs ?!” I usually gasp in disbelief. “My dear, you must find a new vampire squid, one from this decade.

I was expecting similar fireworks on Saturday morning when I pulled up for a haircut. A few days earlier, the Italian government was plunged into typical chaos. The Prime Minister has resigned, and now, with each passing day, it’s unclear what kind of government will form (if any), leaving the handling of a crucial COVID bailout for households and businesses in limbo. . A prolonged government crisis would be very bad news for companies like Alessandro’s.

I expected Alessandro to talk about the latest commotion, but he only wanted to talk about one thing: GameStop.

He’s a fan of the Reddit Squad.

***

Have a very good day everyone. I’ll see you here tomorrow… Until then, there’s more news below.

Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com

As always, you can write tobullsheet@fortune.comor reply to this email with suggestions and comments.



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